Payments Company Square Loves Bitcoin

What can Bitcoin do to earnings statements? Quite a lot, apparently.

In its earnings report Thursday, payments company Square revealed that it generated $2 million in profit from its Cash App due to a rise in sales from an increase in Bitcoin’s price. The app allows users to buy, sell, and deposit Bitcoin.

Jack Dorsey, CEO of the company and Twitter co-founder, told analysts that the company had generated nearly half of its $260 million Cash App revenue from Bitcoin sales. Square had reported $166 million in Bitcoin sales during all of 2018, a time when the cryptocurrency’s price was in a slump.

“In just three years, Cash App revenue performed basically (from) $0 million to $135 million, excluding Bitcoin. We love you, Bitcoin,” said Dorsey during the call. He said the app’s customers used it multiple times in a week to purchase Bitcoin. According to him, the introduction of Bitcoin had resulted in “significant growth” in monetization and engagement within the app.

But analysts and investors were not impressed with Dorsey’s affection for Bitcoin. Square’s price tanked 14 percent after the earnings call. The Wall Street Journal referred to the fall as a “course correction” for Square’s stock, which has jumped by 24 percent this year.

Why is Bitcoin Important To Square?

Dorsey has been a proponent of Bitcoin for several years now and even said that Bitcoin is the best candidate to become the Internet’s native currency. He has also created a team to improve infrastructure for cryptocurrencies. The benefit for Square is that it can leverage that infrastructure to improve its payments platform and make it faster. “…with payments, you have to go to each market and pay attention to regulators. You need a partnership with a local bank. This is a very slow process in any new market,” he has said. Bitcoin and blockchain could shorten the process and streamline the regulatory approvals required for new markets.